One cannot discuss the economics of TV and video without considering advertising. Most platforms today use mixed modes of advertising and subscription to provide an economically viable platform. Streaming video platforms are being offered by established networks, content creators as well as start-up companies. All of them are looking for the right mix of subscription and advertising to make the overall business model successful.
Programmatic video advertising has been developing and gaining against traditional advertising spending. The following graph shows the development of advertising spending in the US and the rest of the world. The data was collected by Magna Global and was not shown at the Streaming Media East conference. It does,however, show how programmatic advertising spending is growing at a good rate.
Magna Global Worldwide Programmatic Ad Spend – Source: Altitude Digital
Many content owners as well as networks feared that programmatic video advertising may trigger a race to the bottom, a situation that so far has not materialized. However, one of the reasons is that the traditional companies are using programmatic as a tool and technique to change the way advertising is placed, without opening the content availability to a true bidding process. This means that the main players still control availability of content and also pricing. Premium content will always come at a premium and be in high demand. On the other side, less desirable content will sell at a discount.
Today programmatic is helping to reduce overhead cost for transactions. There are many forms of programmatic platforms being used and they differ on how they are operated and allow the user to buy advertising space. In any case, the availability of more data about the viewers is one of the biggest advantages for the agencies. As some said during the discussion, they are just now starting to look at the collected data and what it means for the advertising agencies. At the same time, there is still an issue of validated measurements as it refers to the data for digital content. The existing data companies are still working on providing a relevant metric.
In a different session it was stated that some of the new video platforms are often surprised what content has become a hit over the weekend. Taking this one step further, advertisers will most likely miss out on such opportunities as ad placement would only be possible after the content has reached its peak. For this content type, programmatic might look completely different than it does for networks. – NH
